NWC News Alert (September 30, 2025)

A special thanks to Valley Water for their generous support of this Federal Spotlight. Your commitment helps drive our mission forward.

GOVERNMENT FUNDING DEADLINE: WHAT IT MEANS AND WHAT’S NEXT

Sept. 30, 2025

At-a-Glance Summary

• Fiscal year 2026 begins at midnight with no appropriations in place.
• Senate votes today on rival stopgap bills, but neither has enough support to advance.
• Without a deal, the government shuts down at 12:01 a.m. ET Wednesday.
• Federal agencies activate contingency plans immediately; essential staff work, others furloughed.
• Impacts include delays in permits, contracts, and federal services.
• Programs tied to stopgap bills, like NFIP and TANF, expire unless extended.
• The Army Corps of Engineers can continue ongoing projects under a CR but cannot start new ones.
• Congress itself remains open and available for official business during a shutdown.

Framing the Moment

If you’re in Washington today, the talk is everywhere: the federal government’s fiscal year ends at midnight, and there is no budget in place for 2026. The clock is ticking, and unless Congress acts, the government shuts down at 12:01 a.m. ET Wednesday.

So let’s take a step back. The federal fiscal year runs from October 1 to September 30. In theory, Congress passes 12 separate bills each year that fund everything from defense to agriculture to the Army Corps of Engineers. In practice, though, that rarely happens anymore. The last time all 12 bills were passed individually was back in 1996 for fiscal year 1997.

Instead, lawmakers now rely on temporary fixes like continuing resolutions (CRs), which extend the previous fiscal year’s funding for a set time, or large packages called omnibus or minibuses. This patchwork has become Washington’s “new normal,” regardless of party.

Where We Are Right Now

It’s September 30, and no full-year appropriations are in place for 2026. Congressional leaders met with President Trump yesterday at the White House, but no agreement emerged. Both sides are dug in:

• Republican leaders want a short, “clean” CR that keeps government open until late November without adding new policies.
• Democratic leaders insist any CR must also extend health insurance subsidies set to expire at the end of this year and include protections against the administration’s practice of withholding or redirecting funds already approved by Congress.

The Senate is expected to vote today on rival stopgap bills, but neither has the votes to advance. The House is not even scheduled to convene until tomorrow, after the deadline passes.

The Senate Showdown

The Senate is expected to take up two rival stopgap bills today:

• House-passed Republican plan: A short-term CR through November 21 with no policy add-ons.
• Democratic counterproposal: A CR through October 31 that extends health-care subsidies and limits executive authority to redirect funds.

On the surface, it might look like Republicans have the advantage because they hold 53 seats compared to 45 Democrats and 2 Independents. That’s a simple majority. But here’s the catch: the Senate’s rules require 60 votes to advance most legislation, including continuing resolutions.

That means:

• Even if every Republican supports their bill, they still need 7 Democrats or Independents to reach 60.
• Democrats, with their 47 total, also fall short. Their proposal would need 13 Republicans to get across the line.

This is why both bills are expected to fail today. Neither side can reach the 60-vote threshold without making concessions, and that’s the deadlock at the heart of this shutdown fight.

What Happens First in a Shutdown

So what actually happens at 12:01 a.m. Wednesday if no deal is reached? Federal agencies don’t scramble in real time. They already have contingency plans written and posted well in advance. These playbooks have become routine, because for decades Washington has lurched toward shutdown almost every year, sometimes pulling back at the very last minute.

At midnight, the Office of Management and Budget (OMB) issues formal guidance that appropriations have lapsed. From there, agencies activate their plans. Employees are notified whether they are considered “excepted” (essential) and must keep working, or “furloughed” (nonessential) and sent home.

For many in Washington, this isn’t theoretical. Just a couple of years ago, when NWC’s Annual Meeting landed at the start of the fiscal year, Congress nearly missed the deadline. It was a weekend scramble on Capitol Hill before a CR was finally passed. By then, some of our speakers had already canceled travel because federal employees are barred from official trips if a shutdown looks imminent. That’s how close the ripple effects can hit.

What a Shutdown Looks Like

Impacts vary, but past lapses show consistent patterns:

• Defense: Nearly half of DoD civilian staff furloughed; military personnel report but without pay until reopening.
• Labor / Statistics: Monthly jobs reports paused.
• Homeland Security: Border and law enforcement continue; administrative functions slow or stop.
• Public services: Airports face delays as TSA and air traffic control staff work without pay.
• EPA / FDA inspections: Past shutdowns stopped thousands of environmental and food inspections.
• National Parks: Either closed completely or left open but unstaffed.
• IRS: Loan verifications and tax refunds delayed, however, the current contingency plan allows activities for the first five days in October before funding lapses.

Shutdowns are often called “partial” because programs funded by mandatory spending or fees continue, but for the public, the disruptions are very visible.

What About Congress Itself?

Unlike most federal agencies, Congress does not shut down during a lapse in appropriations. The legislative branch is funded through a separate appropriations bill, and even if that bill has not been enacted, Congress generally keeps operating.

• Capitol stays open: The House and Senate chambers continue to meet, hold votes, and conduct official business.
• Member offices: Most congressional offices remain open, although some may operate with reduced staff. Each office decides which employees are “excepted” and continue to work, and which are furloughed.
• Committee work: Hearings and markups can still continue, especially on matters tied to resolving the funding lapse.
• Constituent services: Offices generally keep core services running, such as responding to urgent casework, but less urgent activities may be delayed.

In practice, this means that even during a shutdown, Members of Congress and their staff may still available for official business, including meeting with constituents and organizations.

The Added Twist This Year

We’re now at the end of fiscal year 2025, but 2025 hasn’t been funded by new appropriations – instead, Congress passed a full-year continuing resolution in the spring that essentially carried forward fiscal year 2024 funding levels into FY 2025.

If Congress passes another CR now, it would extend those same FY 2024 funding levels into fiscal year 2026. In effect, agencies could end up operating on two-year-old budgets – a rare scenario in modern appropriations history.

But there’s an added layer: supplemental appropriations. Over FY 2024 (and past years), Congress made supplemental appropriations for emergencies, disasters, and special priorities. CRs generally extend base funding (the original annual appropriations), not those supplemental funds, unless Congress explicitly includes them again. That means some programs dependent on those supplements might find themselves underfunded or constrained when a CR is passed.

Programs Usually Tied to Stopgap Bills

Beyond agency budgets, several key programs have legal authorities that expire with the fiscal year. If Congress does not act, they can lapse at midnight:

• National Flood Insurance Program (NFIP): FEMA administers the program, which provides flood insurance policies covering more than 4.7 million households and businesses. Without reauthorization, FEMA cannot issue new policies or renew existing ones. Policies already in force remain valid.
• Farm Bill authorities: The current extension of the 2018 Farm Bill expires Sept. 30, 2025. Certain programs, such as crop supports, operate on a crop-year basis. Others, tied to the fiscal year, would lapse at expiration. If not reauthorized, commodity programs eventually revert to permanent law enacted in the 1940s, beginning with dairy in January 2026.
• Temporary Assistance for Needy Families (TANF): Provides block grants to states for cash assistance and work programs for low-income families. Without a CR, TANF’s federal authorization expires, and states must rely on carryover funds until Congress reauthorizes the program.
• Health care “extenders”: Includes programs such as Community Health Centers, the National Health Service Corps, rural hospital add-ons, and Medicare ambulance payment adjustments. Without renewal, statutory authority for these programs expires.

The USACE Twist: What CRs Mean for Corps Projects & Studies

Because the U.S. Army Corps of Engineers depends on annual project-specific appropriations, CRs have particular consequences:

• Ongoing work continues, but no new studies or projects can begin until a full-year bill is enacted.
• Funding rigidity: CRs limit how funds can be shifted among accounts, making it harder to respond to changing needs.
• Momentum stalls: Projects poised to begin construction or feasibility phases are delayed.
• Planning uncertainty: Districts and sponsors cannot reliably forecast future timelines or funding streams.

Executive Branch Discretion for Reduction-in-Force During Shutdowns

Shutdowns also raise questions about how much authority the executive branch has in deciding which programs continue. Traditionally, agencies furlough “nonessential” employees and continue only activities that protect life and property or are funded outside annual appropriations.

This year, public discussion has included the possibility of using shutdown conditions to permanently reduce the federal workforce. Most agency plans continue to assume furloughs, not layoffs, and reductions in force follow lengthy procedures under civil service law. Still, the debate underscores how much discretion the executive branch holds when funding lapses.

Who Gets Blamed and Why It Matters

Shutdowns always come with political fallout. The last lengthy one in 2018–2019 stretched 35 days, the longest in history, and federal workers turned to food banks to get by. Both parties tried to shift blame, but the public mostly saw it as dysfunction in Washington.

This time, Republicans are framing their stance as “keep the government open without extra demands.” Democrats are framing theirs as “protect health care and stop executive overreach.” Which narrative resonates will matter heading into the 2026 midterms.

Timeline: How We Got Here

• Normal order: Congress passes and the president enacts 12 appropriations bills by Sept. 30.
• Historical record: The last time all 12 were enacted on time was for Fiscal Year 1997. For the past several decades, Congress has not been able to pass all 12 on schedule, and in recent years it has been rare to enact even a few as standalone bills.
• This month: Negotiations stalled, with Republicans offering a short-term extension and Democrats insisting on additional policies.
• Yesterday: Leaders met at the White House, but no deal was reached.
• Today: Senate votes are expected on dueling stopgaps, but the House won’t act before the 9/30 deadline.
• Midnight: Absent a deal, the federal government shuts down.

Why This Matters to You

A shutdown isn’t just political theater. It affects permits, grants, contracts, and the ability of federal agencies to work with partners on infrastructure, navigation, flood control, and water resources projects. Even if those programs eventually receive back pay or retroactive authority, delays can ripple into planning and construction seasons, regulatory approvals, and the broader economy.

If a CR passes instead, agencies stay open, but they remain frozen at old funding levels. That creates its own kind of uncertainty, because no one can start new projects or initiatives until a full-year appropriations package is finally in place.

Resources:

• Congressional Research Service, Government Shutdowns and Executive Branch Operations: FAQ (CRS R47693)
• Bipartisan Policy Center, “What Happens If the Government Shuts Down?,” last updated Sept. 3, 2025
• Congressional Research Service, Past Government Shutdowns: Key Resources (CRS R41759)
• Dawson & Associates, “Stopgap Funding makes the U.S. Army Corps of Engineers job harder,” Oct. 3, 2024.

Looking Ahead

We’ll continue to track developments closely as Congress works toward a resolution. These situations can shift quickly, and while we strive to provide clear, accurate information, there are always details that emerge in real time once agencies begin implementing their contingency plans.

If you are based in Washington or have firsthand updates on how a shutdown is affecting your agency or project, please share them with us. Your perspective helps us keep the broader NWC community informed. We will include relevant insights in future updates.